Testimony 

Before the Committee on Veterans’ 

Affairs, House of Representatives 

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 10:00 a.m. 

Thursday, May 8, 2003 DEPARTMENT OF 

VETERANS AFFAIRS 

Key Management 

Challenges in Health and 

Disability Programs 

Statement of Cynthia A. Bascetta 

Director, Health Care—Veterans’ 

 Health and Benefits Issues 

GAO-03-756T 
VA has taken actions to address key challenges in its health care and 

disability programs. However, growing demand for health care and a 

potentially larger and more complex disability workload may make VA’s 

challenges in these areas more complex. 

• Enhancing access to health care. VA is challenged to deliver timely, 

convenient health care to its enrolled veteran population. Too many 

veterans continue to travel too far and wait too long for care. However, 

shifting care closer to where veterans live is complicated by stakeholder 

interests. In addition, VA’s efforts to reduce waiting times may be 

complicated by an anticipated short-term surge in demand for specialty 

outpatient care. VA also faces difficult challenges in providing equitable 

access to nursing home care services to a growing elderly veteran 

population. 

• Improving the efficiency of health care delivery. VA is challenged to 

find more efficient ways to meet veterans’ demand for health care. VA 

operates a large portfolio of aged buildings that is not well aligned to 

efficiently meet veterans’ needs. As a result, VA faces difficult 

realignment decisions involving capital investments, consolidations, 

closures, and contracting with local providers. VA also faces challenges 

in implementing management changes to improve the efficiency of 

patient support services, such as food and laundry services. 

• Improving the effectiveness of disability programs. VA is 

challenged to find more effective ways to compensate veterans with 

disabilities. VA’s outdated disability determination process does not 

reflect a current view of the relationship between impairments and work 

capacity. Advances in medicine and technology have allowed some 

individuals with disabilities to live more independently and work more 

effectively. VA also faces continuing challenges to improve the 

timeliness, quality and consistency of claims processing. Major 

improvements may require fundamental program changes. 

GAO designated federal real property, including VA health care 

infrastructure, and federal disability programs, including VA disability 

benefits, as high-risk areas in January 2003. GAO did this to draw attention 

to the need for broad-based transformation in these areas, which is critical 

to improving the government’s performance and ensuring accountability 

within expected resource limits. 

In previous GAO reports and 

testimonies on the Department of 

Veterans Affairs (VA), and in its 

ongoing reviews, GAO identified 

major management challenges 

related to enhancing access to 

health care, improving the 

efficiency of health care delivery, 

and improving the effectiveness of 

disability programs. This 

testimony underscores the 

importance of continuing to make 

progress in addressing these 

challenges and ultimately 

overcoming them. 

What Remains to Be Done 

VA remains challenged to: 

• ensure timely, convenient, and 

equitable access to health care, 

including hospital, specialty 

outpatient, and nursing home 

care; 

• realign its health care delivery 

infrastructure and implement 

other management initiatives 

to increase the efficiency of 

the delivery of patient support 

services; and 

• seek solutions to modernize its 

disability programs as well as 

improve the timeliness and 

quality of disability claims 

decisions. 

www.gao.gov/cgi-bin/getrpt?GAO-03-756T.

To view the full report, including the scope 

and methodology, click on the link above. 

For more information, contact Cynthia A. 

Bascetta at (202) 512-7101. 

Highlights of GAO-03-756T, a testimony 

before the Committee on Veterans’ Affairs, 

House of Representatives 

May 8, 2003 

DEPARTMENT OF VETERANS AFFAIRS 

Key Management Challenges in Health 

and Disability Programs 
Page 1 GAO-03-756T 

Mr. Chairman and Members of the Committee: 

Thank you for inviting me to discuss our past and current work on 

veterans’ health care and disability benefits—two major program areas at 

the Department of Veterans Affairs (VA). As you know, VA’s budget 

submission for fiscal year 2004 includes about $64 billion and 214,000 staff. 

In fiscal year 2002, VA spent about $23 billion to provide health care to 

over 4 million veterans and about $26 billion to provide cash disability 

benefits to over 3 million veterans, family members, and survivors. 

It is especially fitting, with the recent deployment of our military forces to 

armed conflict, that we reaffirm our commitment to provide high quality 

services in a convenient and timely manner to those who serve our nation 

in its times of need. Meeting this commitment as efficiently and effectively 

as possible is also of paramount importance. In this regard, my statement 

focuses on challenges that VA faces to ensure reasonable access to health 

care, use its health care resources efficiently, and manage its disability 

programs effectively. 

My comments today are based on numerous reports and testimonies 

issued over the last 7 years, including significant recommendations we 

have made and VA’s progress in implementing them. (See Related GAO 

Products.) We did our work in over 100 VA health care delivery locations 

and conducted surveys of all 21 health care networks and reviews of 

disability management issues covering all 57 disability claims processing 

regional offices. We are also reporting preliminary results of ongoing 

health care work that started in November 2002. This involves visits to 

delivery locations, document reviews, and interviews with VA officials in 

headquarters and the networks. We did our work in accordance with 

generally accepted government auditing standards. 

In summary, VA is challenged to meet the acute and nursing home care 

needs of veterans in a timely, convenient, and equitable manner. Despite 

VA’s significant access enhancements over the past several years, too 

many veterans continue to travel too far and wait too long for 

appointments, especially when they require hospital admissions or 

consultations with specialists on an outpatient basis. When trying to 

reduce travel times, VA faces difficult decisions because shifting care 

closer to where veterans live can have significant ramifications for 

stakeholders, such as medical schools, as well as for the use of VA’s 

existing resources. In addition, VA’s efforts to reduce waiting times may be 

complicated by an anticipated surge in demand for VA specialty outpatient 

care over the next 10 years. Also, the population most in need of nursing 
Page 2 GAO-03-756T 

home care—veterans who are 85 years old or older—is growing. As a 

result, VA faces difficult decisions concerning the delivery and sizing of 

nursing home care services to equitably meet these needs. 

VA is also challenged to find ways to use available health care resources 

more efficiently to meet veterans’ demand for health care. For example, 

VA operates and maintains a large portfolio of aged health care assets, 

primarily buildings. This infrastructure is no longer effectively aligned 

with VA’s new delivery model that emphasizes outpatient care. As a result, 

VA faces difficult realignment decisions involving capital investments, 

consolidations, closures, and contracting with local providers. These may 

have significant ramifications for stakeholders, such as medical schools 

and unions, primarily because realignments involve a shifting of workload 

among delivery locations or workforce reductions. VA also faces 

challenges in implementing management changes to improve the 

efficiency of patient support services, such as food and laundry services. 

In addition, VA is challenged to find ways to compensate disabled veterans 

in a more meaningful and timely manner. For example, VA uses a disability 

determination process that is based on economic conditions in 1945 and, 

as such, does not accurately reflect current relationships between 

impairments and the skills and abilities needed to work in today’s business 

environment. Moreover, the consequences of some medical conditions for 

many individuals have been reduced through advances in medicine and 

technology, which allow individuals to live with greater independence and 

function more effectively in work settings. Besides modernizing the 

economic and medical underpinnings of the program, VA remains in the 

midst of significant challenges to improve the quality, timeliness, and 

consistency of disability claims processing. Despite its recent efforts, too 

many disabled veterans wait too long for disability decisions. Significant 

and sustainable improvements may not be possible without fundamental 

program design changes, including those that require legislative actions to 

implement. VA and the Congress could face significant stakeholder 

resistance to such changes. 

I would also like to point out that we designated federal real property and 

federal disability programs as high-risk areas in January 2003.1

 We did this 

 1

U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119 (Washington, 

D.C.: Jan. 1, 2003); U.S. General Accounting Office, High-Risk Series: Federal Real 

Property, GAO-03-122 (Washington, D.C.: Jan. 1 2003). 
Page 3 GAO-03-756T 

to draw attention to the need for broad-based transformation in these 

areas, which is critical to improving the government’s performance and 

ensuring accountability within expected resource limits. If this 

transformation is well implemented, agencies will be better positioned to 

achieve mission effectiveness, reduce operating costs, improve facility 

conditions, and enhance security and safety. 

During World War I, Public Health Service hospitals treated returning 

veterans and, at the end of the war, several military hospitals were 

transferred to the Public Health Service to enable it to continue treating 

injured soldiers. In 1921, those hospitals were transferred to the newly 

established Veterans’ Bureau. By the early 1990s, the veterans’ health care 

system had grown into one of our nation’s largest direct providers of 

health care, comprising more than 172 hospitals. 

In October 1995, VA began to transform its health care system from a 

hospital-dominated model to one that provides a full range of health care 

services. A key feature of this transformation involves the development of 

community-based, integrated networks of VA and non-VA providers that 

could deliver health care closer to where veterans live. At that time, about 

half of all veterans lived more than 25 miles from a VA hospital; about 44 

percent of those admitted to VA hospitals lived more than 25 miles away.2

In making care more proximate to veterans’ homes, VA also began shifting 

the delivery of health care from high-cost hospital settings to lower-cost 

outpatient settings. 

To facilitate VA’s transformation, the Congress passed the Veterans’ 

Health Care Eligibility Reform Act of 1996, which furnishes tools that VA 

said were key to a successful transformation, including: 

• new eligibility rules that allow VA to treat veterans in the most appropriate 

setting; 

• a uniform benefits package to provide a continuum of services; and 

• an expanded ability to purchase services from private providers. 

 2

U.S. General Accounting Office, VA Health Care: How Distance From VA Facilities 

Affects Veterans’ Use of VA Services GAO/HEHS-96-31 (Washington, D.C.: Dec. 20, 1995). 

Background 
Page 4 GAO-03-756T 

Today, VA operates over 800 delivery locations nationwide, including over 

600 community-based outpatient clinics and 162 hospitals. VA’s delivery 

locations are organized into 21 geographic areas, commonly referred to as 

networks. Each network includes a management office responsible for 

making basic budgetary, planning, and operating decisions concerning the 

delivery of health care to its veterans. Each office oversees between 5 and 

11 hospitals, as well as many community-based outpatient clinics. 

To promote more cost-effective use of resources, VA is authorized to share 

resources with other federal agencies to avoid unnecessary duplication 

and overlap of activities. VA and the Department of Defense (DOD) have 

entered into agreements to exchange inpatient, outpatient, and specialty 

care services as well as support services. Local facilities also have 

arranged to jointly purchase pharmaceuticals, laboratory services, medical 

supplies, and equipment. 

Also, VA has been authorized to enter into agreements with medical 

schools and their teaching hospitals. Under these agreements, VA 

hospitals provide training for medical residents, and appoint medical 

school faculty as VA staff physicians to supervise resident education and 

patient care. Currently, about 120 medical schools and teaching hospitals 

have affiliation agreements with VA. About 28,000 medical residents 

receive some of their training in VA facilities every year. 

Veterans’ eligibility for health care also has evolved over time. Before 

1924, VA health care was available only to veterans who had wounds or 

diseases incurred during military service. Eligibility for hospital care was 

gradually extended to war-time veterans with lower incomes and, in 1973, 

to peace time veterans with lower incomes. By 1986, all veterans were 

eligible for hospital and outpatient care for service-connected conditions 

as well as for conditions unrelated to military service.3

VA implemented an enrollment process in 1998 that was established 

primarily as a means of prioritizing care if sufficient resources were not 

available to serve all veterans seeking care. About 6.2 million veterans had 

enrolled by the end of fiscal year 2002. In contrast, the overall veteran 

population is estimated to be about 25 million. VA projects a decline in the 

 3

U.S. General Accounting Office, VA Health Care: Issues Affecting Eligibility Reform 

Efforts, GAO/HEHS-96-160 (Washington, D.C.: Sept. 11, 1996).
Page 5 GAO-03-756T 

total veteran population over the next 20 years while the enrolled 

population is expected to decline more slowly as shown in table 1. 

Table 1: Veteran Population and Enrollment Projections between Fiscal Years 2007 

and 2022 (in millions) 

 2007 2012 2017 2022 

Veteran population 22.8 20.6 18.6 16.9 

Enrollment 6.3 6.3 6.1 5.7 

Source: VA 

In addition to health care, VA provides disability benefits to those veterans 

with service-connected conditions. Also, VA provides pension benefits to 

low-income wartime veterans with permanent and total disabilities 

unrelated to military service. Further, VA provides compensation to 

survivors of service members who died while on active duty. 

Disabled veterans are entitled to cash benefits whether or not employed 

and regardless of the amount of income earned. The cash benefit level is 

based on the percentage evaluation, commonly called the “disability 

rating,” that represents the average loss in earning capacity associated 

with the severity of physical and mental conditions. VA uses its Schedule 

for Rating Disabilities to determine which disability rating to assign to a 

veteran’s particular condition. VA’s ratings are in 10 percent increments, 

from 0 to 100 percent. 

Although VA generally does not pay disability compensation for 

disabilities rated at 0 percent, such a rating would make veterans eligible 

for other benefits, including health care. About 65 percent of veterans 

receiving disability compensation have disabilities rated at 30 percent or 

lower; about 8 percent are 100 percent disabled. Basic monthly payments 

range from $104 for a 10 percent disability to $2,193 for a 100 percent 

disability. 

To process claims for these benefits, VA operates 57 regional offices. 

These offices made almost 800,000 rating-related decisions4

 in fiscal year 

2002. Regional office personnel develop claims, obtain the necessary 

 4

Rating-related claims are primarily original claims for compensation and pension benefits 

and “reopened” claims; for example, when a veteran claims that a service-connected claim 

has worsened. 
Page 6 GAO-03-756T 

information to evaluate claims, and determine whether to grant benefits. 

In doing so, they consider veterans’ military service records, medical 

examination and treatment records from VA health care facilities, and 

treatment records from private providers. Once claims are developed, the 

claimed disabilities are evaluated, and ratings are assigned based on 

degree of disability. Veterans with multiple disabilities receive a single, 

composite rating. For veterans claiming pension eligibility, the regional 

office also determines if the veteran served in a period of war, is 

permanently and totally disabled for reasons unrelated to military service, 

and meets the income thresholds for eligibility. 

Over the past several years, VA has done much to ensure that veterans 

have greater access to health care. Despite this, travel times and waiting 

times are still problems. Another problem faced by aging veterans is 

potentially inequitable access to nursing home care. 

The substantial increase in VA health care delivery locations has enhanced 

access for enrolled veterans in need of primary care, although many still 

travel long distances for primary care.5

 In addition, many who need to 

consult with specialists or require hospitalization often travel long 

distances to receive care. Nationwide, for example, more than 25 percent 

of veterans enrolled in VA health care—over 1.7 million—live over 60 

minutes driving time from a VA hospital. These veterans would have to 

travel a long distance if they require admissions or consultations with 

specialists, such as urologists or cardiologists, located at the closest VA 

hospitals. 

In October 2000, VA established the Capital Asset Realignment for 

Enhanced Services (CARES) program, which has a goal of improving 

veterans’ access to acute inpatient care, primary care, and specialty care. 

CARES is intended to identify how well the geographic distribution of VA 

health care resources matches projected needs and the shifts necessary to 

better align resources and needs. Toward that end, VA has divided, for 

analytical purposes, its 21 networks into 76 geographic areas—groups of 

counties—in order to determine the extent to which enrollees’ travel times 

exceed VA’s access standards. 

 5

U.S. General Accounting Office, VA Health Care: Community-Based Clinics Improve 

Primary Care Access, GAO-01-678T (Washington, D.C.: May 2, 2001). 

Access to Health Care 

Could Be Enhanced 

Many Veterans Travel Too 

Far for Hospital 

Admissions and Specialty 

Consultations 
Page 7 GAO-03-756T 

For example, as part of CARES, VA has mandated that the 21 network 

directors identify ways to ensure that at least 65 percent of the veterans in 

their areas are within VA’s access standards for hospital care—60 minutes 

for veterans residing in urban counties, 90 minutes for those in rural 

counties, and 120 minutes for those in highly rural counties. VA has 

identified 25 areas that do not meet this 65 percent target. In these areas, 

over 900,000 enrolled veterans have travel times that exceed VA’s access 

standards. In addition, as part of CARES, VA identified 51 other areas 

where access enhancements may be addressed at the discretion of 

network directors, given that at least 65 percent of all enrolled veterans in 

those areas have travel times that meet VA’s standard. In these areas, 

about 875,000 enrolled veterans have travel times that exceed VA’s 

standards. 

By contrast, VA has not mandated that network directors enhance access 

for veterans who travel long distances to consult with specialists. Unlike 

hospital care, VA has not established standards for acceptable travel times 

for specialty care. Currently, nearly 2 million enrolled veterans live more 

than 60 minutes driving time from specialists located at the closest VA 

hospital. 

When considering ways to enhance access for veterans, VA network 

directors may consider three basic options: construct a new VA-owned 

and operated delivery location; negotiate a sharing agreement with 

another federal entity, such as a DOD facility; or contract with nonfederal 

health care providers. Shifting the delivery of health care closer to where 

veterans live may have significant ramifications for other stakeholders, 

such as medical schools. For example, within the 76 areas, there are 

smaller geographic areas that contain large concentrations of enrollees 

outside VA’s access standards—10,000 or more—who live closer to nonVA hospitals than they do to the nearest VA hospitals. Such enrolled 

veterans could account for significant portions of the hospital workload at 

the nearest VA delivery locations. Therefore, a shifting of this workload 

closer to veterans’ residences could reduce the size of residency training 

opportunities at existing VA delivery locations. 

Enhancing veterans’ access can also have significant ramifications 

regarding the use of VA’s existing resources. Currently, VA has most of its 

resources dedicated to costs associated with its existing hospitals and 

other infrastructure, including clinical and support staff, at its major 

health care delivery locations. Reducing veterans’ travel times through 

contracting with providers in local communities or other options could 

reduce demand for services at VA’s existing, more distant delivery 
Page 8 GAO-03-756T 

locations. Efficient operation of those locations could become more 

difficult given the smaller workloads in relation to the operating costs of 

existing hospitals. 

We also have found that excessive waiting times for VA outpatient care 

persist—a situation that we have reported on for the last decade. For 

example, in August 2001, we reported that veterans frequently wait longer 

than 30 days—VA’s access standard—for appointments with specialists at 

VA delivery locations in Florida and other areas of the country.6

 More 

recently, a Presidential task force reported in its July 2002 interim report 

that veterans are finding it increasingly difficult to gain access to VA care 

in selected geographic regions.7

 For example, the task force found that the 

average waiting time for a first outpatient appointment in Florida, which 

has a large and growing veteran population, is over a year. 

Although there is general consensus that waiting times are excessive, we 

reported, and VA agreed, that its data did not reliably measure the scope of 

the problem.8

 To improve its data, VA is in the process of developing an 

automated system to more systematically measure waiting times. VA has 

also taken several actions to mitigate the impact of long waiting times, 

including limiting enrollment of lower priority veterans and granting 

priority for appointments to certain veterans with service-connected 

disabilities.9

VA faces an impending challenge, however, reducing the length of times 

veterans wait for appointments. Specifically, VA’s current projections of 

acute health care workload indicate a surge in demand for acute health 

 6

U.S. General Accounting Office, VA Health Care: More National Action Needed to Reduce 

Waiting Times, but Some Clinics Have Made Progress, GAO-01-953 (Washington, D.C.: 

Aug. 31, 2001). 

7

President’s Task Force to Improve Health Care Delivery for Our Nation’s Veterans: 

Interim Report, (Washington, D.C.: July 31, 2002). 

8

U.S. General Accounting Office, Veterans’ Health Care: VA Needs Better Data on Extent 

and Causes of Waiting Times, GAO/HEHS-00-90 (Washington, D.C.: May 31, 2000). 

9

The Veterans’ Health Care Eligibility Reform Act of 1996 required VA to establish priority 

categories for enrollment to manage access in relation to available resources. VA has 8 

priority categories, with Priority 1 veterans—those with service-connected disabilities 

rated 50 percent or more—having the highest priority for enrollment. By contrast, Priority 8 

veterans are primarily veterans with no service-connected disabilities and higher incomes. 

Many Veterans Wait Too 

Long for Appointments 
Page 9 GAO-03-756T 

care services over the next 10 years. For example, specialty outpatient 

demand nationwide is expected to almost double by fiscal year 2012. 

VA’s long-term care infrastructure, including nursing homes it operates, 

was developed when the concentration of veteran population was 

distributed differently by region. Consequently, the location of VA’s 

current infrastructure may not provide equitable access across the 

country. In addition, when VA developed its long-term care infrastructure, 

it relied more on nursing home care and less on home and communitybased services than current practice. To help update VA’s long-term care 

policy, the Federal Advisory Committee on the Future of VA Long-Term 

Care recommended in 1998 that VA maintain its nursing home capacity at 

the level of that time but meet the growing veteran demand for long term 

care by greatly expanding home and community-based service capacity.10

The House Committee on Veterans’ Affairs has expressed concern that VA 

needs to maintain its nursing home capacity workload at 1998 levels. 

VA currently operates its own nursing home care units in 131 locations, 

according to VA headquarters officials. In addition, it pays for nursing 

home care under contract in community nursing homes. VA also pays part 

of the cost of care for veterans at state veterans’ nursing homes and in 

addition pays a portion of the construction costs for some state veterans’ 

nursing homes. In all these settings combined, VA’s nursing home 

workload—average daily census—has declined by more than 1,800 since 

1998. See table 2. The biggest decline has been in community nursing 

home care where the average daily census was 31 percent less in 2002 than 

in 1998. Average daily census in VA-operated nursing homes also declined 

by 11 percent during this period. A 9 percent increase in state veterans’ 

nursing homes’ average daily census offsets some of the decline in average 

daily census in community and VA-operated nursing homes. 

 10VA Long-Term Care At The Crossroads: Report of the Federal Advisory Committee on 

the Future of VA Long-Term Care, (Washington, D.C.: June, 1998). 

Veterans’ Access to 

Nursing Home Care May 

Be Inequitable 
Page 10 GAO-03-756T 

Table 2: Nursing Home Average Daily Census Provided or Paid for by VA in Fiscal 

Years 1998-2002 

Type of nursing home 1998 1999 2000 2001 2002 

VA nursing homes 13,426 12,653 11,828 11,674 11,974 

Community nursing homes 5,575 4,547 3,682 4,010 3,831 

State veterans’ nursing homes 14,602 15,051 15,286 15,593 15,941 

Total 33,603 32,251 30,796 31,277 31,746 

Source: VA. 

Note: The average daily census represents the total number of days of nursing home care divided by 

the number of days in the year. 

VA headquarters officials told us that the decline in nursing home average 

daily census could be the result of a number of factors. These factors 

include providing more emphasis on shorter-term care for post-acute care 

rehabilitation, providing more home and community-based services to 

obviate the need for nursing home care, assisting veterans to obtain 

placement in community nursing homes where care is financed by other 

payers, such as Medicaid, when appropriate, and difficulty recruiting 

enough nursing staff to operate all beds in some VA-operated nursing 

homes. 

VA policy provides networks broad discretion in deciding what nursing 

home care to offer those patients that VA is not required to provide 

nursing home care to under the provisions of the Veterans Millennium 

Health Care and Benefits Act of 1999.11 Networks’ use of this discretion 

appears to result in inequitable access to nursing home care. For example, 

some networks have policies to provide long-term nursing home care to 

these veterans who need such care if resources allow, while other 

networks do not have such policies. As a result, these veterans who need 

long-term nursing home care may have access to that care in some 

networks but not others. This is significant because about two-thirds of 

VA’s current nursing home users are recipients of discretionary nursing 

home care. 

 11This act requires that VA provide nursing home care to veterans with service-connected 

disabilities of 70 percent or more and those who need such care because of a serviceconnected disability. This provision of the act expires on December 31, 2003. 
Page 11 GAO-03-756T 

VA intended to address veterans’ access to nursing home care as part of its 

larger CARES initiative to project future health care needs and determine 

how to ensure equitable access. However, initial projections of nursing 

home need exceeded VA’s current nursing home capacity. VA said that the 

projections did not reflect its long-term care policy and decided not to 

include nursing home care in its CARES initiative. Instead, VA officials 

told us that they have developed a separate process to provide projections 

for nursing home, and home and community-based services needs. These 

officials expect that new projections will be developed for consideration 

by the Under Secretary for Health by July 2003. VA officials also told us 

that VA will use this information in its strategic planning initiatives to 

address nursing home and other long-term care issues at the same time 

that VA implements its CARES initiatives. 

Because VA has not systematically examined its nursing home policies and 

access to care, veterans have no assurance that VA’s $2 billion nursing 

home program is providing equitable access to care to those who need it. 

This is particularly important given the aging of the veteran population. 

The veteran population most in need of nursing home care—veterans 85 

years old or older—is expected to increase from almost 640,000 to over 1 

million by 2012 and remain at about that level through 2023. Until VA 

develops a long-term care projection model consistent with its policy, VA 

will not be able to determine if its nursing home care units in 131 locations 

and other nursing home care services it pays for provide equitable access 

to veterans now or in the future. 

In recent years, VA has made an effort to realign its capital assets, 

primarily buildings, to better serve veterans’ needs as well as institute 

other needed efficiencies. Despite this, many of VA’s buildings remain 

underutilized and patient support services are not always provided 

efficiently. VA could make better use of its resources by taking steps to 

partner with other public and private providers, purchase care from such 

providers, replace obsolete assets with modern ones, consolidate 

duplicative care provided by multiple locations serving the same 

geographic areas where it would be cost effective to do so, and assess 

various management options to improve the efficiency of patient support 

services. 

Efficiency Could Be 

Improved through 

Health Care Asset 

Realignment and 

Other Management 

Actions 
Page 12 GAO-03-756T 

VA has a large and aged infrastructure, which is not well aligned to 

efficiently meet veterans’ needs. In recent years, as a result of new 

technology and treatment methods, VA has shifted delivery from inpatient 

to outpatient settings in many instances and shortened lengths of stay 

when hospitalization was required. Consequently, VA has excess inpatient 

capacity at many locations. 

For example, in August 1999, we reported that VA owned about 4,700 

buildings, over 40 percent of which had operated for more than 50 years, 

and almost 200 of which were built before 1900. Many organizations in the 

facilities management environment consider 40 to 50 years to be the useful 

life of a building.12 Moreover, VA used fewer than 1,200 of these buildings 

(about one-fourth of the total) to deliver health care services to veterans. 

The rest were used primarily to support health care activities, although 

many had tenants or were vacant.13 In addition, most delivery locations 

had mission-critical buildings that VA considered functionally obsolete. 

These included, for example, inpatient rooms not up to industry standards 

concerning patient privacy; outpatient clinics with undersized examination 

rooms; and buildings with safety concerns, such as vulnerability to 

earthquakes. 

As part of VA’s transformation, begun in 1995, its networks implemented 

hundreds of management initiatives that significantly enhanced their 

overall efficiency and effectiveness.14 The success of these strategies—

shifting inpatient care to more appropriate settings, establishing primary 

care in community clinics, and consolidating services in order to achieve 

economies of scale—significantly reduced utilization at most of VA’s 

inpatient delivery locations. For example, VA operated about 73,000 

hospital beds in fiscal year 1995. In 1998, veterans used on average fewer 

than 40,000 hospital beds per day, and by 2001 usage had further declined 

to about 16,000 hospital beds per day. 

 12Price Waterhouse, Independent Review of the Department of Veterans Affairs’ Office of 

Facilities Management (Washington, D.C.: June 17, 1998). 

13Health care support buildings include warehouses, engineering shops, laundries, fire 

stations, day care centers and boiler plants. 

14U.S. General Accounting Office, Veterans’ Affairs: Progress and Challenges in 

Transforming Health Care, GAO/T-HEHS-99-109 (Washington, D.C.: April 15, 1999). 

Capital Assets Not WellAligned to Meet Veterans’ 

Needs 
Page 13 GAO-03-756T 

In 1999, we concluded that VA’s existing infrastructure could be the 

biggest obstacle confronting VA’s ongoing transformation efforts.15 During 

a hearing in 1999 before this Committee’s Subcommittee on Health, we 

pointed out that, although VA was addressing some realignment issues, it 

did not have a plan in place to identify buildings that are no longer needed 

to meet veterans’ health care needs. We recommended that VA develop a 

market-based plan for restructuring its delivery of health care in order to 

reduce funds spent on underutilized or inefficient buildings. In turn those 

funds could be reinvested to better serve veterans’ needs by placing health 

care resources closer to where they live. 

To do so, we recommended that VA comply with guidance from the Office 

of Management and Budget. The guidance suggested that market-based 

assessments include (1) assessing a target population’s needs, 

(2) evaluating the capacity of existing assets, (3) identifying any 

performance gaps (excesses or deficiencies), (4) estimating assets’ life 

cycle costs, and (5) comparing such costs to other alternatives for meeting 

the target population’s needs. Alternatives include (1) partnering with 

other public or private providers, (2) purchasing care from such providers, 

(3) replacing obsolete assets with modern ones, or (4) consolidating 

services duplicated at multiple locations serving the same market. 

During the 1999 hearing, the subcommittee chairman urged VA to 

implement our recommendations and VA agreed to do so. In August 2002, 

VA announced the results of a pilot study in its Great Lakes network, 

which includes Chicago and other locations. VA selected three 

realignment strategies in this network – consolidation of services at 

existing locations, opening of new outpatient clinics, and closure of one 

inpatient location. Currently, VA is analyzing ways to realign health care 

delivery in its 20 remaining networks. VA expects to issue its plans by the 

end of 2003. To date, VA has projected veterans’ demand for acute health 

care services through fiscal year 2022, evaluated available capacity at its 

existing delivery locations, and targeted geographic areas where 

alternative delivery strategies could allow VA to operate more efficiently 

and effectively while ensuring access consistent with its standards for 

travel time. 

 15U.S. General Accounting Office, VA Health Care: Capital Asset Planning and Budgeting 

Need Improvement, GAO/T-HEHS-99-83 (Washington, D.C: Mar. 10, 1999). 
Page 14 GAO-03-756T 

For example, VA has the opportunity to achieve efficiencies through 

economies of scale in 30 geographic areas where two or more major 

health care delivery locations that are in close proximity provide 

duplicative inpatient and outpatient health care services. VA may also 

achieve similar efficiencies in 38 geographic areas where two or more 

tertiary care delivery locations are in close proximity. VA considers 

delivery locations to be in close proximity if they are within 60 miles of 

one another for acute care and within 120 miles for tertiary care. In 

addition, VA may achieve additional efficiencies in 28 geographic areas 

where existing delivery locations have low acute medicine workloads, 

which VA has defined as serving less than 40 hospital patients per day. VA 

also identified more than 60 opportunities for partnering with the DOD to 

better align the infrastructure of both agencies.16

VA faces difficult challenges when attempting to improve service delivery 

efficiencies. For example, service consolidations can have significant 

ramifications for stakeholders, such as medical schools and unions, 

primarily due to shifting of workload among locations and workforce 

reductions. Understandably, medical schools are reluctant to change longstanding business relationships involving, among other things, training of 

medical residents. For example, VA tried for 5 years to reach agreement on 

how to consolidate clinical services at two of Chicago’s four major health 

care delivery locations before succeeding in August 2002. This is because 

such restructuring required two medical schools to use the same location 

to train residents, a situation that neither supported. 

Unions, too, have been reluctant to support planning decisions that result 

in a restructuring of services. This is because operating efficiencies that 

result from the consolidation of clinical services into a single location 

could also result in staffing reductions for such support services as 

grounds maintenance, food preparation, and housekeeping. For example, 

as part of its ongoing transformation, VA proposed to consolidate food 

preparation services of 9 delivery locations into a single location in New 

York City in order to operate more efficiently. Two unions’ objections, 

 16In May 2000, we reported that most VA/DOD sharing activity involved a relatively small 

number of sharing agreements and joint ventures. U.S. General Accounting Office, VA and 

Defense Health Care: Evolving Health Care Systems Require Rethinking of Resource 

Sharing Strategies, GAO/HEHS-00-52 (Washington, D.C.: May 17, 2000). The Congressional 

Commission on Servicemembers and Veterans Transition Assistance also reported that 

opportunities exist for greater sharing and partnering between VA and DOD. See Report of 

the Congressional Commission on Servicemembers and Veterans Transition Assistance 

(Washington, D.C.: Jan. 14, 1999). 
Page 15 GAO-03-756T 

however, slowed VA’s restructuring, although VA and the unions 

subsequently agreed on a way to complete the restructuring. 

VA also faces difficult decisions concerning the need for and sizing of 

capital investments, especially in locations where future workload may 

increase over the short term before steadily declining. In large part, such 

declines are attributable to the expected nationwide decrease in the 

overall veteran population by more than one-third by 2030; in some areas, 

veteran population declines are expected to be steeper. It may be in VA’s 

best interests to partner with other public or private providers for services 

to meet veterans’ demands rather than risk making a major capital 

investment that would be underutilized in the latter stages of its useful life. 

In cases when VA’s realignment results in buildings that are no longer 

needed to meet veterans’ health care needs, VA faces other difficult 

decisions regarding whether to retain or dispose of these buildings. VA has 

several options, including leasing, demolition, or transferring buildings to 

the General Services Administration (GSA), which has the authority to 

dispose of excess or surplus federal property. When there is no leasing 

potential, VA faces potentially high demolition costs as well as uncertain 

site preparation costs associated with the transfer of buildings to GSA. 

Given that such costs involve the use of health care resources, ensuring 

that disposal decisions are based on systematic analyses of costs and 

benefits to veterans poses another realignment challenge.17

The challenge of dealing with a misaligned infrastructure is not unique to 

VA. In fact, we identified federal real property management as a high-risk 

area in January 2003. For the federal government overall and VA in 

particular, technological advancements, changing public needs, 

opportunities for resource sharing, and security concerns will call for a 

new way of thinking about real property needs. In VA’s case, it has 

recognized the critical need to better manage its buildings and land and is 

in the process of implementing CARES to do so. VA has the opportunity to 

lead other federal agencies with similar real property challenges. However, 

VA and other agencies have in common persistent problems, including 

competing stakeholder interests in real property decisions. Resolving 

these problems will require high-level attention and effective leadership. 

 17U.S. General Accounting Office, VA Health Care: Improved Planning Needed for 

Management of Excess Real Property, GAO-03-326 (Washington, D.C.: Jan. 29, 2003). 
Page 16 GAO-03-756T 

As VA continues to transform itself from an inpatient- to an outpatientbased health care system, it must find more efficient, systemwide ways of 

providing patient care support services, such as consolidation of services 

and the use of competitive sourcing. For example, VA’s shift in emphasis 

from inpatient to outpatient health care delivery has significantly reduced 

the need for inpatient care support services, such as food and laundry 

services. To make better use of resources, some VA inpatient facilities 

have consolidated food production locations, used lower-cost Veterans 

Canteen Service (VCS) workers instead of higher-paid Nutrition and Food 

Service workers18 to provide inpatient food services, or contracted out for 

the provision of these services. Some VA facilities have also consolidated 

two or more laundries into a single location, contracted for labor to 

operate VA laundries, or contracted out laundry services to commercial 

organizations. 

VA needs to systematically explore the further use of such options across 

its health care system. In November 2000, we recommended that VA 

conduct studies at all of its food and laundry service locations to identify 

and implement the most cost-effective way to provide these services at 

each location.19 At that time, we identified 63 food production locations 

that could be consolidated into 29, saving millions of dollars annually. We 

estimated that VA could potentially save millions of dollars by 

consolidating both food and laundry production locations. 

VA may also be able to reduce its food and laundry service costs at some 

facilities through competitive sourcing—through which VA would 

determine whether it would be more cost-effective to contract out these 

services or provide them in-house. VA must ensure, however, that, if a 

decision to contract for services is made, contract terms on payments and 

service quality standards will continue to be met. For example, we found 

that weaknesses in the monitoring of VA’s Albany, New York laundry 

 18The wage differences between the two result from differences in how wage rates for their 

respective pay schedules are determined. 

19U.S. General Accounting Office, VA Health Care: Expanding Food Service Initiatives 

Could Save Millions, GAO-01-64 (Washington, D.C.: Nov. 30, 2000); U.S. General 

Accounting Office, VA Laundry Service: Consolidations and Competitive Sourcing Could 

Save Millions, GAO-01-61 (Washington, D.C.: Nov. 30, 2000). 

Patient Support Services 

Could Be Provided More 

Efficiently 
Page 17 GAO-03-756T 

contract appear to have resulted in overpayments, reducing potential 

savings.20

In August 2002, VA issued a directive establishing policy and 

responsibilities for its networks to follow in implementing a competitive 

sourcing analysis to compare the cost of contracting and the cost of inhouse performance to determine who can do the work most cost 

effectively. VA has announced that, as part of the President’s Management 

Agenda, it will complete studies of competitive sourcing of 55,000 

positions by 2008. VA plans to complete studies of competitive sourcing 

for all its laundry positions by the end of calendar year 2003. Similar 

initiatives for food services and other support services are in the planning 

stages at VA. Overall, VA’s plan for competitive sourcing shows promise. 

However, VA has not yet established a timeline for implementing an 

assessment of competitive sourcing and the other options we 

recommended for all its inpatient food service locations. Until VA 

completes these assessments and takes action to reduce costs, it may be 

paying more for inpatient food services than required and as a result have 

fewer resources available for the provision of health care to veterans. 

We recognize that one of the options we recommended that VA assess, the 

competitive sourcing process set forth in the Office of Management and 

Budget (OMB) Circular A-76, historically has been difficult to implement. 

Specifically, there are concerns in both the public and private sectors 

regarding the fairness of the competitive sourcing process and the extent 

to which there is a “level playing field” for conducting public-private 

competitions. It was against this backdrop that the Congress in 2001, 

mandated that the Comptroller General establish a panel of experts to 

study the process used by the government to make sourcing decisions. The 

Commercial Activities Panel that the Comptroller convened conducted a 

yearlong study, and heard repeatedly about the importance of competition 

and its central role in fostering economy, efficiency, and continuous 

performance improvement. The panel made a number of 

recommendations for improving sourcing policies and processes. 

As part of the administration’s efforts to implement the recommendations 

of the Commercial Activities Panel, OMB published proposed changes to 

 20U.S. General Accounting Office, Inadequate Oversight of Laundry Facility at the 

Department of Veterans Affairs Albany, New York, Medical Center, GAO-01-207R

(Washington, D.C.: Nov. 30, 2000). 
Page 18 GAO-03-756T 

Circular A-76 for public comment in November 2002. In our comments on 

the proposal to the Director of OMB this past January, we noted the 

absence of a link between sourcing policy and agency missions, 

unnecessarily complicated source selection procedures, certain unrealistic 

time frames, and insufficient guidance on calculating savings. The 

administration is now considering those and other comments as it finalizes 

the revisions to the Circular. 

Significant program design and management challenges hinder VA’s ability 

to provide meaningful and timely support to disabled veterans and their 

families. VA relies on outmoded medical and economic disability criteria. 

VA also has difficulty providing veterans with accurate, consistent, and 

timely benefit decisions, although recent actions have improved 

timeliness. 

In assessing veterans’ disabilities, VA remains mired in concepts from the 

past. VA’s disability programs base eligibility assessments on the presence 

of medically determinable physical and mental impairments. However, 

these assessments do not always reflect recent medical and technological 

advances, and their impact on medical conditions that affect the ability to 

work. VA’s disability programs remain grounded in an approach that 

equates certain medical impairments with the incapacity to work. 

Moreover, advances in medicine and technology have reduced the severity 

of some medical conditions and allowed individuals to live with greater 

independence and function more effectively in work settings. Also, VA’s 

rating schedule updates have not incorporated advances in assistive 

technologies—such as advanced wheelchair design, a new generation of 

prosthetic devices, and voice recognition systems—that afford some 

disabled veterans greater capabilities to work. 

VA has made some progress in updating its rating schedule to reflect 

medical advances. Revisions generally consist of (1) adding, deleting, and 

reorganizing medical conditions in the Schedule for Rating Disabilities, 

(2) revising the criteria for certain qualifying conditions, and (3) wording 

changes for clarification or reflection of current medical terminology. 

However, VA’s effort to update its disability criteria within the context of 

current program design has been slow and is insufficient to provide the 

up-to-date criteria VA needs to ensure meaningful and equitable benefit 

Fundamental Changes 

Could Improve 

Effectiveness of VA’s 

Disability Programs 

VA’s Disability Criteria Are 

Outmoded 
Page 19 GAO-03-756T 

decisions. Completing an update of the schedule for one body system has 

generally taken 5 years or more; the schedule for the ear and other sense 

organs took 8 years. In August 2002,21 we recommended that VA use its 

annual performance plan to delineate strategies for and progress in 

updating its disability rating schedule. VA did not concur with our 

recommendation because it believes that developing timetables for future 

updates to the rating schedule is inappropriate while the initial review is 

ongoing. 

In addition, VA’s disability criteria have not kept pace with changes in the 

labor market. The nature of work has changed in recent decades as the 

national economy has moved away from manufacturing-based jobs to 

service- and knowledge-based employment. These changes have affected 

the skills needed to perform work and the settings in which work occurs. 

For example, advancements in computers and automated equipment have 

reduced the need for physical labor. However, the percentage ratings used 

in VA’s Schedule for Rating Disabilities are primarily based on physicians’ 

and lawyers’ estimates made in 1945 about the effects that serviceconnected impairments have on the average individual’s ability to perform 

jobs requiring manual or physical labor. VA’s use of a disability schedule 

that has not been modernized to account for labor market changes raises 

questions about the equity of VA’s benefit entitlement decisions; VA could 

be overcompensating some veterans, while under-compensating or 

denying compensation entirely to others. 

In January 1997, we suggested that the Congress consider directing VA to 

determine whether the ratings for conditions in the schedule correspond 

to veterans’ average loss in earnings due to these conditions and adjust 

disability ratings accordingly. Our work demonstrated that there were 

generally accepted and widely used approaches to statistically estimate 

the effect of specific service-connected conditions on potential earnings. 

These estimates could be used to set disability ratings in the schedule that 

are appropriate in today’s socio-economic environment.22

 21U.S. General Accounting Office, SSA and VA Disability Programs: Re-Examination of 

Disability Criteria Needed to Help Ensure Program Integrity, GAO-02-597 (Washington, 

D.C.: Aug. 9, 2002). 

22U.S. General Accounting Office, VA Disability Compensation: Disability Ratings May 

Not Reflect Veterans’ Economic Losses, GAO/HEHS-97-9 (Washington, D.C.: Jan. 7, 1997). 
Page 20 GAO-03-756T 

In August 2002, we recommended that VA use its annual performance plan 

to delineate strategies for and progress in periodically updating labor 

market data used in its disability determination process. VA did not concur 

with our recommendation because it does not plan to perform an 

economic validation of its disability rating schedule, or to revise the 

schedule based on economic factors. According to VA, the schedule is 

medically based; represents a consensus among stakeholders in the 

Congress, VA, and the veteran community; and has been a valid basis for 

equitably compensating disabled veterans for many years. 

Even if VA’s schedule updates were completed more quickly, they would 

not be enough to overcome program design limitations in evaluating 

disabilities. Because of the limited role of treatment in VA disability 

programs’ statutory and regulatory design, its efforts to update the rating 

schedule would not fully capture the benefits afforded by treatment 

advances and assistive technologies. Current program design limits VA’s 

ability to assess veterans’ disabilities under corrected conditions, such as 

the impact of medications on a veteran’s ability to work despite a severe 

mental illness. In August 2002, we recommended that VA study and report 

to the Congress on the effects that a comprehensive consideration of 

medical treatment and assistive technologies would have on its disability 

programs’ eligibility criteria and benefit package. This study would include 

estimates of the effects on the size, cost, and management of VA’s 

disability programs and other relevant VA programs; and would identify 

any legislative actions needed to initiate and fund such changes. VA did 

not concur with our recommendation because it believes this would 

represent a radical change from the current programs, and it questioned 

whether stakeholders in the Congress and the veterans’ community would 

accept such a change. 

VA’s disability program challenges are not unique. For example, the Social 

Security Administration’s (SSA) disability programs23 remain grounded in 

outmoded concepts of disability. Like VA, SSA has not updated its 

disability criteria to reflect the current state of science, medicine, 

technology and labor market conditions. Thus, SSA also needs to 

reexamine the medical and vocational criteria it uses to determine 

whether individuals are eligible for benefits. 

 23Disability Insurance (DI) provides benefits to workers with severe long-term disabilities 

who have enough work history to be insured for coverage under the program. 

Supplemental Security Income (SSI) provides benefits to disabled, blind, or aged 

individuals with low income and limited resources, regardless of their work histories. 
Page 21 GAO-03-756T 

Even if VA brought its disability criteria up to date, it would continue to 

face challenges in ensuring quality and timely decisions, including 

ensuring that veterans get consistent decisions—that is, comparable 

decisions on benefit entitlement and rating percentage—regardless of the 

regional office making the decisions. VA has made some progress in 

improving disability program administration, but much remains to be done 

before VA has a system that can sustain production of accurate, 

consistent, and timely decisions. 

VA is making changes that will allow it to better identify accuracy 

problems at the national, regional office, and individual employee levels. 

In turn, this will allow VA to identify underlying causes of inaccuracies and 

target corrective actions, such as additional training. In response to our 

March 1999 recommendation,24 VA has centralized accuracy reviews under 

its Systematic Technical Accuracy Review (STAR) program to meet 

generally applicable government standards on segregation of duties and 

organizational independence. Also, the STAR program began reviewing 

more decisions in fiscal year 2002, with the intent of obtaining statistically 

valid accuracy data at the regional office level; regional office-level 

accuracy goals have been incorporated into regional directors’ 

performance standards. Further, VA is developing a system to measure the 

accuracy of individual employees’ work; this measurement is tied to 

employee performance evaluations. 

While VA has made changes to improve accuracy, it continues to face 

challenges in ensuring consistent claims decisions. In August 2002, we 

recommended that VA establish a system to regularly assess and measure 

the degree of consistency across all levels of VA claims adjudication.25

While VA agreed that consistency is an important goal, it did not fully 

respond to our recommendation regarding consistency because it did not 

describe how it would measure consistency and evaluate progress in 

reducing any inconsistencies it may find. Instead, VA said that consistency 

is best achieved through comprehensive training and communication 

among VA components involved in the adjudication process. We continue 

 24U.S. General Accounting Office, Veterans’ Benefits Claims: Further Improvements 

Needed in Claims-Processing Accuracy, GAO/HEHS-99-35 (Washington, D.C.: Mar. 1, 

1999). 

25U.S. General Accounting Office, Veterans’ Benefits: Quality Assurance for Disability 

Claims and Appeals Processing Can Be Further Improved, GAO-02-806 (Washington, 

D.C.: Aug. 16, 2002). 

VA Is Trying to Improve 

the Quality and Timeliness 

of Claims Processing 
Page 22 GAO-03-756T 

to believe that VA will be unable to determine the extent to which such 

efforts actually improve consistency of decision-making across all levels of 

VA adjudication now and over time. 

VA’s major focus over the past 2 years has been on producing more timely 

decisions for veterans, and it has made significant progress in improving 

timeliness and reducing the backlog of claims. The Secretary established 

the VA Claims Processing Task Force, which in October 2001 made 

specific recommendations to relieve the veterans’ claims backlog and 

make claims processing more timely. The task force observed that the 

work management system in many regional offices contributed to 

inefficiency and an increased number of errors. The task force attributed 

these problems primarily to the broad scope of duties performed by 

regional office staff—in particular, veterans service representatives (VSR). 

For example, VSRs were responsible for both collecting evidence to 

support claims and answering claimants’ inquiries. Based on the task 

force’s recommendations, VA implemented its claims process 

improvement (CPI) initiative in fiscal year 2002. Under this initiative, 

regional office claims processing operations were reorganized around 

specialized teams to handle specific stages of the claims process. For 

example, regional offices have teams devoted specifically to claims 

development, that is, obtaining evidence needed to evaluate claims. 

Also, VA focused on increasing production of rating-related decisions to 

help reduce inventory and, in turn, improve timeliness. In fiscal years 2001 

and 2002, VA hired and trained hundreds of new claims processing staff. 

VA also set monthly production goals for fiscal year 2002 for each of its 

regional offices, incorporating these goals into regional office directors’ 

performance standards. VA completed almost as many decisions in the 

first half of 2003 (404,000) than in all of fiscal year 2001 (481,000). This 

increase in production has contributed to a significant inventory 

reduction; on March 31, 2003, the rating-related inventory was about 

301,000 claims, down from about 421,000 at the end of fiscal year 2001. 

Meanwhile, rating-related decisions timeliness has been improving 

recently; an average of 199 days for the first half of fiscal year 2003, down 

from an average of 223 days in fiscal year 2002. 

While VA has made progress in getting its workload under control and 

improving timeliness, it will be challenged to sustain this performance. 

Moreover, it will be difficult to cope with future workload increases due to 

factors beyond its control, such as future military conflicts, court 

decisions, legislative mandates, and changes in the filing behavior of 

veterans. VA is not alone in facing these challenges; SSA is also challenged 
Page 23 GAO-03-756T 

to improve its ability to provide accurate, consistent, and timely disability 

decisions to program applicants. For example, after failing in its attempts 

since 1994 to redesign a more comprehensive quality assurance system, 

SSA has recently begun a new quality management initiative. Also, SSA has 

taken steps to provide training and enhance communication to improve 

the consistency of decisions, but variations in allowances rates continue 

and a significant number of denied claims are still awarded on appeal. SSA 

has recently implemented several short-term initiatives not requiring 

statutory or regulatory changes to reduce processing times but is still 

evaluating strategies for longer-term solutions. 

More dramatic gains in timeliness and inventory reduction might require 

program design changes. For example, in 1996, the Veterans’ Claims 

Adjudication Commission noted that most disability compensation claims 

are repeat claims—such as claims for increased disability percentage—

and most repeat claims were from veterans with less severe disabilities. 

The Commission questioned whether concentrating processing resources 

on these claims, rather than on claims by more severely disabled veterans, 

was consistent with program intent. Another possible program design 

change might involve assigning priorities to the processing of claims. For 

example, claims from veterans with the most severe disabilities and 

combat-disabled veterans could receive the highest priority attention. 

Program design changes, including those to address the Commission’s 

concerns, might require legislative actions. 

In addition to program design changes, outside studies of VA’s disability 

claims process identified potential advantages to restructuring VA’s 

system of 57 regional offices. In its January 1999 report, the Congressional 

Commission on Servicemembers and Veterans Transition Assistance 

stated that some regional offices might be so small that their 

disproportionately large supervisory overhead unnecessarily consumes 

personnel resources. Similarly, in its 1997 report, the National Academy of 

Public Administration stated VA should be able to close a large number of 

regional offices and achieve significant savings in administrative overhead 

costs. 

Apart from the issue of closing regional offices, the Commission 

highlighted a need to consolidate disability claims processing into fewer 

locations. VA has consolidated its education assistance and housing loan 

guaranty programs into fewer than 10 locations, and the Commission 

encouraged VA to take similar action in the disability programs. VA 

proposed such a consolidation in 1995 and in that proposal enumerated 

several potential benefits, such as allowing VA to assign the most 
Page 24 GAO-03-756T 

experienced and productive adjudication officers and directors to the 

consolidated offices; facilitating increased specialization and as-needed 

expert consultation in deciding complex cases; improving the 

completeness of claims development, the accuracy and consistency of 

rating decisions, and the clarity of decision explanations; improving 

overall adjudication quality by increasing the pool of experience and 

expertise in critical technical areas; and facilitating consistency in 

decisionmaking through fewer consolidated claims-processing centers. VA 

has already consolidated some of its pension workload (specifically, 

income and eligibility verifications) at three regional offices.26 Also, VA has 

consolidated at its Philadelphia regional office dependency and indemnity 

compensation claims by survivors of servicemembers who died on active 

duty, including those who died during Operation Enduring Freedom and 

Operation Iraqi Freedom. 

Mr. Chairman, this concludes my prepared statement. I will be happy to 

answer any questions that you or Members of the Committee may have. 

For further information, please contact me at (202) 512-7101. Individuals 

making key contributions to this testimony include Paul R. Reynolds, 

James C. Musselwhite, Jr., Irene P. Chu, Pamela A. Dooley, Cherie’ M. 

Starck, William R. Simerl, Richard J. Wade, Thomas A. Walke, Cheryl A. 

Brand, Kristin M. Wilson, Greg Whitney, and Daniel Montinez. 

 26These are the VA regional offices in St. Paul, Minnesota; Philadelphia, Pennsylvania; and 

Milwaukee, Wisconsin. 

Contact and 

Acknowledgments 
Page 25 GAO-03-756T 

VA Health Care: Improved Planning Needed for Management of Excess 

Real Property. GAO-03-326. Washington, D.C.: January 29, 2003. 

High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January 1, 

2003. 

High-Risk Series: Federal Real Property. GAO-03-122. Washington, D.C.: 

January 1, 2003. 

Major Management Challenges and Program Risks: Department of 

Veterans Affairs. GAO-03-110. Washington, D.C.: January 1, 2003. 

Veterans’ Benefits: Quality Assurance for Disability Claims and Appeals 

Processing Can Be Further Improved. GAO-02-806. Washington, D.C.: 

August 16, 2002. 

SSA and VA Disability Programs: Re-Examination of Disability 

Criteria Needed to Help Ensure Program Integrity. GAO-02-597. 

Washington, D.C.: August 9, 2002. 

VA Long-Term Care: The Availability of Noninstitutional Services Is 

Uneven. GAO-02-652T. Washington, D.C.: April 25, 2002. 

VA Long-Term Care: Implementation of Certain Millennium Act 

Provisions Is Incomplete, and Availability of Noninstitutional Services 

Is Uneven. GAO-02-510R. Washington, D.C.: March 29, 2002. 

VA Health Care: More National Action Needed to Reduce Waiting Times, 

but Some Clinics Have Made Progress. GAO-01-953. Washington, D.C.: 

August 31, 2001. 

VA Health Care: Community-Based Clinics Improve Primary Care 

Access. GAO-01-678T. Washington, D.C.: May 2, 2001. 

Inadequate Oversight of Laundry Facility at the Department of Veterans 

Affairs Albany, New York, Medical Center. GAO-01-207R. Washington, 

D.C.: November 30, 2000. 

VA Health Care: Expanding Food Service Initiatives Could Save 

Millions. GAO-01-64. Washington, D.C.: November 30, 2000. 

VA Laundry Service: Consolidations and Competitive Sourcing Could 

Save Millions. GAO-01-61. Washington, D.C.: November 30, 2000. 

Related GAO Products 
Page 26 GAO-03-756T 

Veterans’ Health Care: VA Needs Better Data on Extent and Causes of 

Waiting Times. GAO/HEHS-00-90. Washington, D.C.: May 31, 2000. 

VA and Defense Health Care: Evolving Health Care Systems Require 

Rethinking of Resource Sharing Strategies. GAO/HEHS-00-52. 

Washington, D.C.: May 17, 2000. 

VA Health Care: VA Is Struggling to Address Asset Realignment 

Challenges. GAO/T-HEHS-00-88. Washington, D.C.: April 5, 2000. 

VA Health Care: Improvements Needed in Capital Asset Planning and 

Budgeting. GAO/HEHS-99-145. Washington, D.C.: August 13, 1999. 

VA Health Care: Challenges Facing VA in Developing an Asset 

Realignment Process. GAO/T-HEHS-99-173. Washington, D.C.: July 22, 

1999. 

Veterans’ Affairs: Observations on Selected Features of the Proposed 

Veterans’ Millennium Health Care Act. GAO/T-HEHS-99-125. Washington, 

D.C.: May 19, 1999. 

Veterans’ Affairs: Progress and Challenges in Transforming Health 

Care. GAO/T-HEHS-99-109. Washington, D.C.: April 15, 1999. 

VA Health Care: Capital Asset Planning and Budgeting Need 

Improvement. GAO/T-HEHS-99-83. Washington, D.C.: March 10, 1999. 

Veterans’ Benefits Claims: Further Improvements Needed in ClaimsProcessing Accuracy. GAO/HEHS-99-35. Washington, D.C.: March 1, 1999. 

VA Health Care: Closing a Chicago Hospital Would Save Millions and 

Enhance Access to Services. GAO/HEHS-98-64. Washington, D.C.: April 16, 

1998. 

VA Hospitals: Issues and Challenges for the Future. GAO/HEHS-98-32. 

Washington, D.C.: April 30, 1998. 

VA Health Care: Status of Efforts to Improve Efficiency and Access. 

GAO/HEHS-98-48. Washington, D.C.: February 6, 1998. 
Page 27 GAO-03-756T 

VA Disability Compensation: Disability Ratings May Not Reflect 

Veterans’ Economic Losses. GAO/HEHS-97-9. Washington, D.C.: January 7, 

1997. 

VA Health Care: Issues Affecting Eligibility Reform Efforts. GAO/HEHS96-160. Washington, D.C.: September 11, 1996. 

(290289) 
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
GAO’s Mission The General Accounting Office, the audit, evaluation and investigative arm of

Congress, exists to support Congress in meeting its constitutional responsibilities 

and to help improve the performance and accountability of the federal 

government for the American people. GAO examines the use of public funds; 

evaluates federal programs and policies; and provides analyses, 

recommendations, and other assistance to help Congress make informed

oversight, policy, and funding decisions. GAO’s commitment to good government

is reflected in its core values of accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost is

through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and fulltext files of current reports and testimony and an expanding archive of older 

products. The Web site features a search engine to help you locate documents 

using key words and phrases. You can print these documents in their entirety, 

including charts and other graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site

daily. The list contains links to the full-text document files. To have GAO e-mail 

this list to you every afternoon, go to www.gao.gov and select “Subscribe to daily 

E-mail alert for newly released products” under the GAO Reports heading. 

The first copy of each printed report is free. Additional copies are $2 each. A

check or money order should be made out to the Superintendent of Documents.

GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a

single address are discounted 25 percent. Orders should be sent to: 

U.S. General Accounting Office 

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 

U.S. General Accounting Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Public Affairs